Angola and Norway - the perfect partnership? Business, politics and the challenge of human rights
Tax builds countries: A window of opportunity for Angola
Angola is a country of great natural and cultural diversity. The country’s natural resource endowment is outstanding in Africa, and economic growth has accelerated since 2002 – yet most Angolans have never been able to reap its benefits. Angola’s human development indicators are persistently low nearly a decade after the end of the war. Available information indicates that the maternity-related death rate and mother-child health statistics remain among the worst in the world. Poverty and its related complex of problems are widespread, and gross inequality is a chronic feature of the country’s social characteristics and visual appearance. Images of the “resource curse” or “the paradox of plenty” are often invoked when describing Angola.
Politics in Angola were long characterised by the rivalry between the MPLA government and Unita’s forces. Although Unita dominated and controlled large tracts of the land during much of the war; it was always the MPLA party which kept power in Luanda since independence. President José Eduardo dos Santos has been in power since 1979. He has therefore overseen the transformation of Angola, from the early post-colonial days into a Cuban and Soviet-inspired one-party state and command economy, then into a multi-party democracy under a nominally liberal constitution with a free market capitalist ethos. Despite these dramatic changes the power of the ruling party has been a constant. The economic and state-sector elites are also strongly associated with the ruling party.
The CMI-CEIC research programme seeks to address social, political and economic challenges:
Project Title: Diversification of the Angolan economy
Angola is the second most concentrated economy in the world in terms of exports, after Iraq. Research conducted under the diversification project has found that concentration of the Angolan economy has increased substantially since independence, and also since the end of the civil war in 2002. A thorough examination of official documents has revealed that diversification has been largely absent from the policy agenda of the Angolan government up till 2011, which coincides with the start-up of the CEIC-CMI diversification project. A key aim of the project is to analyze whether and how the prospect for and effects of diversification depend on political economy factors. An article published by project staff in Energy Policy argues that political elites in undemocratic countries may resist diversification as it can increase the power of other groups and hence undermine the elite’s access to economic rents. Descriptive evidence produced by the project also reveals that more democratic countries tend to be significantly more diversified. In 2014, the project will focus on analyzing the extent to which the relation between democracy and diversification is a causal one, and what this entails for our understanding of diversification as a potential means to address the resource curse.
Project Title: Emerging powers and Angola’s infrastructure
The main “emerging powers” involved in the reconstruction of Angolan infrastructure are China and Brazil. India – active in other parts of the region – is less visible in Angola beyond oil. South Africa and South African companies are keen to become involved, but have not succeeded in gaining any significant foothold. South Africa is however, a key player in infrastructure development at the regional level and in neighbouring states. There may also be increasing cooperation between South African and – perhaps especially - Chinese companies in several areas (i.e. the energy sector).
The main purpose of this research is to analyze the role of the emerging powers in Angola in the reconstruction of Angola’s infrastructure, especially energy and infrastructure. How do their approach, instruments and implementation compare to each other? How do they impact on Angola’s policies and approaches to foreign capital and infrastructure development? How do they impact on project implementation and infrastructure development?
Project title: Information and tools for macro‐economic policies
Availability of high quality and relevant information is essential to making sound economic decisions. Governments need information on the status and projected outlook of the economy to address business cycle fluctuations, and to identify needs and opportunities for investing public resources in different sectors of the economy. Similarly, foreign and domestic investors require this type of information to accurately compute the rates of returns to investment projects, in order to make investment decisions.
The project will contribute to the expansion of the database of economic data at CEIC. The focus will be on improving data accuracy, and look into ways of dealing with measurement error. Assessments will also be made of the extent to which available data can be used for more robust predictions. This is based on the need for analyzing trends in the Angolan economy, and building scenarios for the likely paths the economy may take under various conditions. The main output will be the publication of macroeconomic data and projections in the annual Relatorio Economico (Economic Report) and the quarterly Barometro.
Poverty & Entrepreneurship
Project Title: Dynamics of poverty among micro-entrepreneurs in Luanda
What is the situation of the poor in Angola, how do they live and survive in a resource rich context? What are the more immediate, micro level constraints they face in making a living for themselves and their families, and in escaping poverty?
While we know quite a bit about the situation of natural resource rich economies at an aggregate country level, we are less able to theorise the situation at a more disaggregate level. Angola is a case in point, where an absence of publicly available household data makes analysis of poverty and social issues difficult.
In 2010, Development Workshop and CMI jointly conducted a survey of microcredit clients in Luanda. The results suggest that the profitability of entrepreneurship among the poor is constrained by a lack of education and poor health. Further experimental tests also produce some ambiguities related to the effect of education. Education tends to make people favour their own social group over outsiders, i.e. creates greater in-group favouritism. This may make microcredit groups work better, but on the other hand it may create difficulties in the transition to a society with more impartial institutions.
In March 2014, we will resurvey the microcredit clients from the 2010 survey. This will allow us to track changes in their situation and living standards, and identify characteristics of individuals that have been able to graduate to more successful forms of business. Knowing who succeeds in improving their income opportunities, and why they succeed in doing so, provides an essential guide for policy in reducing poverty in Angola.
Political Institutions and Elections
Project Title: Institutions of checks and balances
Institutional factors are increasingly highlighted in the academic literature on the “resource curse” as an explanation to why some countries with rich natural resources have little long-term economic and/or a blocked political development. The article “Drowning in Oil: Angola’s Institutions and the ‘Resource Curse’” makes the analytical distinction between institutions of extraction (institutions enabling and protecting rents extraction) and institutions of redistribution (institutions of power and revenue sharing), in order to analyse how, in Angola, the former are protected and buttressed to enable rents-appropriation, whereas the latter are side-lined and impaired to prevent power and wealth redistribution. The institutions of extraction are typically institutions like the presidency (presidential powers and the executive branch), the national petroleum companies (NOCs), ministries of finance and petroleum, tax authorities, the central bank, and the ruling party. These are all found to be strong in Angola (presidential powers to an extreme degree, according to the brief “Sistema "parlamentar-presidencial" ou presidencialismo extremo?”).
The institutions of redistribution are primarily the institutions of power sharing (the institutions of checks and balances) but also of wealth sharing (the institutions of economic redistribution). The most important institution is elections, followed by the parliament and the judiciary, a number of special agencies of oversight and control such as ombudsmen, auditors, and commissions, and civil society organizations and the media. These are all found to be weak in Angola.
One of the specific institutions of checks and balances is the Angolan election commission (the Comissão Nacional Eleitoral, CNE). The study on the CNE outlines the types and role of governmental electoral management bodies (EMBs), and analyses the CNE’s mandate and independence. It argues that the CNE is in constitutional and legal terms a genuinely independent commission, with a comparatively broad mandate and wide powers. It could therefore, in theory, mitigate the centralisation of power and pave the way for democratisation. However, due to a political context not particularly conducive to special institutions of control and restraint, and due to its establishment and control ‘from above’ (by the president, government, and ruling party), the CNE has not yet reaped its formally allocated powers and do not (as yet) constitute a counter-balancing institution.
Taxation and local governance
Angola is currently implementing a non-oil tax reform. The purpose of this project is to take stock of the tax reform, with a focus on achievements and political and institutional constraints facing the reform efforts. The tax reform was launched in 2010 with significant resources being invested in moving the agenda forward. The study finds that four years later the reform seems to have lost momentum and the quality of the measures introduced and the way they are being implemented receive criticism from many sides. Reforming the utterly outdated tax system was always going to be a daunting challenge, but a number of factors initially indicated that the reform stood a good chance to be successful. A few substantial achievements have been made on the administrative and legal front and, although falling short of the very optimistic projections, revenue collection has improved gradually over the past few years. It has been decided to integrate the customs and domestic tax departments into a general tax administration, but this entity will not be autonomous from the Executive. Efforts have also been made to tax the highly valued real estate market and rental income, which was previously not enforced.
In spite of the rhetoric of modern tax reform characterised by simplification, participation and predictability, the actual reform process appears indecisive and non-transparent. A number of key measures have been delayed significantly and some changes have been rather piecemeal such as the reduction of the corporate income tax rate and inability to revise the numerous brackets in the personal income tax. Moreover, there is no progress on identifying how the tax reform can be aligned with the decentralisation agenda. Progress reports on the tax reform are classified for ‘restricted use’. Draft legislation is not systematically shared for consultations with key stakeholders. Most of the ‘outreach’ is in the form of one-way communication. The study argues that the reform effort, which in many instances appears genuine, seems to have clashed with ‘old-school’ approaches to policymaking as well as the reality of the political economy of Angola. There are indications that the policy agenda is again being driven by high oil-prices and dissatisfaction with the level of GDP growth and public expenditure with little attention being paid to the challenges this created about five years ago, and which led to the launch of the tax reform.
Local governance reform
Decentralisation is still to come in Angola. It remains a politically stalled process, and it requires new political events or “champions” to move it forward.
In 2011 there was quite some optimism that the new constitution would provide an impetus to move the decentralization agenda forward. The decentralization agenda in Angola was always split in two. The deconcentration is about strengthening the local organs of the state, as they exist today, and provide them with more human and financial resources and some autonomy. This agenda was pushed forward by MAT and most actors and stakeholders in Angolan civil society and international development organisations. Devolution is about creating new institutions, called autarquias, with a higher degree of autonomy, which would not be part of the “local organs of the state” – and local elections would produce the local leadership.
Three years after the new constitution setting out the basic design of the autarquias, the agenda does not seem to have advanced at all. Instead, all government claims purport to be strengthening the capacities and staff of the existing local organs of the state (municipios, in particular). No new legislation has been produced regarding the autarquias, not even drafts, and there has been little if any contact or coordination between the PERT (tax reform) and the MAT staff working on autarquias. Hence, there is no discernible plan for the autarquias’ fiscal foundation. The political leaders keep sending few, yet mixed or confusing signals about the eventual date of the local elections. There is much to be debated still. In particular, as the researchers have pointed out in various publications, a very decisive debate is still to be held regarding the meaning and content of “gradual” implementation of the autarquias, as gradualism is not such an un-consequential term as it may seem.
In the absence of an advance of the autarquias, no element of real institutional change has been introduced at the local governance level. Still, there is no accountability in between the leaders of the local organs of the state (governors, administrators) and their local citizenry. The feeble attempt at instituting new councils of local representatives (CACS) seems to have waned, and there are hardly any reports or observations of the CACS taking a role in leading popular participation. The municipios are receiving some budgetary resources for investment (in particular), but they still remain very centrally directed – with the Programa Municipal Integrado de Desenvolvimento Rural e Combate à Pobreza being a case in point. It was first run from the Casa Civil, now from the same staff who has moved to the Ministry of Commerce.
Pluralism & Civil Society
Project title: Media, elections, and critical voices in civil society and opposition
In 2010-11 there was some expectation that the new constitution – that goes far in guaranteeing freedom of expression, speech and the press – would at least safeguard the existing public space in Angola, with regard to the pluralism of media and their ability to let different and critical voices through. The preliminary conclusion is that this expectation did not hold true. Instead, a series of developments have come to restrict media freedom and pluralism if comparing the 2013 situation to that of the immediate post-war years. There has been no relaxation of restriction of FM-radio transmission, and the existing private radio stations are under constant pressure either in their broadcast reach or their editorial line. The TV stations, including the semi-private TV Zimbo, are also under firm control by interests very close to the key families of power.
The research has focused on 6 private newspapers to follow their development. During the last five years, there has been a significant change in the ownership structure in the papers, for a variety of reasons. Some findings are emerging: 1) There has been a concentration of ownership in the hands of 2-3 groups of interest, probably linked to the presidential circle. Several of the newspapers have received investment and have had a significant “facelift” just the last 3 years. 2) The true owners of the newspapers are hard to find, and they make no effort at revealing their identity. Yet a few names are appearing, such as the Madaleno family. 3) What their true intentions and strategies are remains speculation – the investors are certainly not making any money out of the newspapers at the moment. 4) Censorship takes place occasionally that affect the newspapers in different ways, as the owners intervene to stop certain articles or entire editions from entering the market. Due to this direct censorship, and to economic pressures and incentives for the journalists, the issue of self-censorship among journalists and editors is referred to and explained in detail by nearly all journalists. 5) Many journalists and media workers express that things have turned “to the worse” in recent years. 6) Jornal de Angola has undoubtedly taken a turn toward a more openly and unrestrained serving as an instrument of information for the dos Santos rule, vehemently chastising critical voices and disciplining both domestic and international politicians and actors. For all these reasons, the pluralism of opinion and of critical voices in the public space has taken a negative turn even since research started in 2011.